ASTER 


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Author: 


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Title- 


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MASTER   NEGATIVE   # 


COLUMBIA  UNIVERSITY  LIBRARIES 
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Dcurbnell  oorporatiorit  Chicago, 

•••  Praotioal  bonus  plans  for  compensating  sales- 
men with  suggestions  for  applying  to  various  lines 
of  business,  compiled  by  J.C.Aspley.  Chicago 

15  1.     29|  om.   (Special  report,  no.  17) 


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DARTNELL  COHPORATION 


PRACTICAL  BONUS  PU.NS  FOB  COMPENSATING  SALESMEN 


SPECIAL  RKPOHT  NO.  17 


-*if' 


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LIBRARY 


School  of  Business 


THE  PURPOSE)  OF  THFS  RRPORT 


This  is  the  fourth  revised  odition  of  a  report  issued 
by  us  three  years  ago  describing  the  testa  used  by 
The  American  Tobacco  Company  in  selecting  aaleEraen. 
la  preparing  this  report,  w<^  have  included  these 
original  teats,  together  with  other  teats  used  by 
various  sales  managers. 

It  is  not  our  thought  in  compiling  this  information 
to  lay  down  any  series  of  tasts  which  can  be  bodily 
adapted  to  your  business.  We  do  not  believe  that  the 
science  of  sales  management  has  as  yet  progressed  to  a 
point  where  salesmen  can  ba  selected  mechanically.  To 
pick  men  who  will  make  good,  is  still  largely  a  matter 
of  bkill  on  the  part  of  those  making  the  choice. 

But  we  do  believe  that  it  will  materially  assist  a 
sales  manager  to  pick  a  better  class  of  salesmen  by 
having  access  to  tho  best  mathods  of  sales  managers 
in  every  line  of  business,  and  it  is  to  that  end  that 
we  have  issued  this  report  in  its  revised  form.  Even 
if  the  information  herein  contained  only  serves  to 
give  you  one  idea  that  you  can  apply  in  picking  men, 
we  believe  it  will  be  worth  its  cost  several  times 
over  to  you. 


t    t  s 

With  this  report  we  also  include  several  forms  for  use 
in  selecting  and  qualifying  salePinen.  In  the  case  of 
the  salesman's  application  blank,  we  are  prepared  to 
supply  you  with  a  quantity  of  these  blanks.  The  price 
is  $6.00  a  hundred,  plus  $1.00  additional  if  you  wish 
them  imprinted  with  your  firm  name  at  the  top. 


,  /^^^^^DlV^ 


i. 


SPECIAL   REPORT   NO.   17 


PR  ACTIO  ;^L  BONUS  PLANS  FOR  COMPENSATING  SALESMEN 

WITH  SUGGESTIONS  FOR  APPLYING  TO 

VARIOUS  LINES  OF  BUSINESS 


LIBRARY 
SCHOOL  OF  BUSINESS 


Compiled  by 
J.  C.  ASPLEY  -  CHICAGO 


1   I 


Jv-^ 


T" 


\^ 


« 


1-^ 


PURPOSE  OF  THIS  REPORT 


This  report  is  a  fourth  edition  of  a  brief  report  first  issued 
in  1916  dascribing  the  Beechnut  Packing  Company's  new  plan  of  com- 
pensating salesmen  on  a  "Task  and  Bonus"  basis.  We  have,  however, 
added  two  other  new  plans  of  similar  character,  and  made  certain 
additions  to  the  original  report  which  we  trust  will  materially  add 
to  its  suggestiveness. 

Seme  idea  of  the  growing  tendency  of  sales  executives  to  favor 
bonus  plans,  with  a  task  feature,  is  obtained  when  we  say  that  the 
entire  2000  copies  of  the  first  edition  of  this  report  ware  complete- 
ly absorbed  within  a  few  months  after  being  issued.  Wa  personally 
know  of  49  firms  who  have  adopted  the  plan  with  changes  to  suit  their 
particular  requirements. 

In  this  connection  "Advertising  and  Selling  Magazine"  points  out 
in  a  recent  editorials   "Th6re_arja  i)j^„AS_tual  count  only  420  concerns 
in  the  United  States  who  have  anything  like  a  moderA  pl^ir-of  u^lng 
either  a  prize  or  a  bonus.  Siiil  fewSf  havs  aRy'"s ales  manuals,  or 
eve^rTn*"fact  contrbTTn  any  detailed  way  their  salesmen. 

"There  are  probably  not  more  than  inno  nnr^c^.arnR  in  tbg  Uaited 


Stateslfho  use  anything  15ut  tne'omSTre'  and  fire  method  of  handling 
salesmen,  or  have  anything  like  "modern  plan  of  paying  their  sale^ 


me>i.   In  fact  the  great  majority  of  manufactuxers  are  still  letting 
"■"fEeir  salesmen  sell  their  personality  or  else  plain  merchandise  with- 
out a  fleck  of  service." 

An  intimate  knowledge  of  conditions  leads  us  to  believe  that 
these  figures  are  somewhat  understated,  but  it  is  quite  true  that 
ccmparatively  few  concerns  are  alive  to  their  opportunities  for 
increasing  the  productiveness  of  the  sales  force  through  the  use  of 
scientific  bonus  plans.  But  the  movement  is  spreading  rapidly,  and 
the  next  few  years  is  sure  to  see  some  great  strides  made  toward 
more  efficient  sales  management. 

As  the  basis  of  all  scientific  sales  management  must  rest  on   / 
a  flexible  method  of  compensating  salesmen >  so  that  sales  energy  may 
b'e*"directed  to  bSSt  advantage,  we  feel  that  the  subject  covered  in 
this  report  if  not  of  immediate  interest  to  our  subscriber?,  is  one 
about  which  they  wish  to  be  fully  informed.  Wa  tried  to  make  this 
report  as  brief  as  possible,  setting  down  all  the  vital  facts  with- 
out an  over-use  of  words. 


RinriEW  OF  TYPES  OF  BONUS  PLANS  IN  USE 


In  gathering  the  material  for  this  fourth  edition  of  our  report  on  Bonus 
Plans  for  Compensating  Salesmen,  it  was  decided  to  make  some  inquiry  among 
the  2,000  subscribers  to  The  Dartnell  Sales  Service  to  determine;  (l)  the  vari- 
ety of  bonus  plans  in  use;  (2)  the  salient  features  of  each  plan  and  its 
adaptability  to  specific  lines  of  business  and  (3)  to  single  out  those  plans 
which  experience  seemed  to  indicate  most  nearly  met  the  requirements  of 
actual  usage* 

Out  of  a  total  of  250  questionnaires  sent  out,  153  replies  were  received. 
Of  these,  77  or  over  50^  reported  as  using  some  sort  of  a  profit  sharing 


plan.  There  seemed  to  be  a  general  disposition  evident  in  all  the  letters 
received  that  in  order  to  solve  the  problem  of  a  satisfactory  plan  for  com- 
pensating salesmen  it  is  necessary  to  "_3plit"  something  with  the  men  -  not  a 


year  afterwards  as  provided  by  the  straight  salary  plan,  not  on  the  basis  of 
mere  volume  whlcii  tends  to  direct  the  salesman's  efforts  along  undesirable 
lines  -  but  to  "split"  it  as  the  salesman  earns  it,  giving  him  an  inducement 
to  work  along  lines  that  will  build  for  the  future. 

A  brief  review  of  how  this  condition  is  being  met  through  the  bonus 
methods  of  subscribers  replyi):'g  to  our  questionnaire  may  prove  interesting 
as  well  as  suggestive: 

THE  SLIDING  COMMISSION  PLAN:   Particularly  suitable  to  a  business  mar- 
keting a  "one  tim$"  soecialty,  such  as  an  automobile,  office  appliance,  bonds 
or  the  like.  A  series  of  goals  is  laid  out  for  each  man,  according  to  terri- 
tory,  ability  and  season,  and  as  e^ch  goal  is  reached  he  automatically  in- 


i( 


\o' 


(2) 


creases  his  ccmmissions  on  his  total  business.  For  example,  if  a  salesman 


--4»- 


sells  $5,000  worth  he  gets  8ay  20% ^n   his  months  business,  but  if  he  w^rks 
extra  hard  and  is  able  to  close  the  month  with  sales  of  |6,000  he  automatically 
advances  his  commission  to  22/J,  and  so  forth.  In  using  this  plan  it  is  well 


to  guard  against  cancellations  by  requiring  a  small  cash  payment  with  order. 
BONOS  ON  HARD  SELLING  PRODUCTS:   A  wid.3  variety  of  concerns  in  many  lines  of 
business  selling  a  number  of  products  find  this  plan  especially  practical. 
Sometimes  the  bonusis^aid  by  grouping  the  products  arid^paying^an  increased 
commission  on  different  groups.  For  instance,  in  the  dry  goods  field  an  extra 
1%   commission  is  quite  com   ^y  paid  on  notions,  ribbons,  and  ready-to-wear 


goods.  In  the  same  way  concernssoi: 


both  bulk  and  packaged  products 


often  offer  a  special  bonus  on  packaged  goods  sales,  as  this  busines^^has 

greater  repeating  qualities. 

SALARY ,  ElIEIliI^£.MP  COMMISSION  PLAN:   The  operation  of  this  plan  necessitates 


running  an  acagiiat  with  each  salesman  charging  him  with  his  salary  and  travel- 
ing  expenses.   Credit  his  account  with  his  percentage  of  sales,  figured  in 
cash  collections.  Whenever  the  credit  exceeds  his  ^larj^and  expenses  he  is 

-    -I   T  |-|-     III   II I  I      '""   •"   ' "   ""   '"      ■■'-■■■■   I'l""'" 

entitled  to  a  profit-sharing  check.   These  checks  are  generally  issued  month- 


ly. The  item  "percentage  of 


,"  referred  to  above  is  an  arbitrary  percent- 


age determined  by  the  management,  and  represents  the  profit  aiter  oyerhead  and 


^— >^»»«»— 1 1  ■  '"" 


similar  items  have  been  deducted.   In  addition  to  this  bonus  on  net  profit, 

this^^lan  also  pays  a  ccmmissicn  acaording  to  sales  to  certain  classes  of.. 

trade  --  there  being  one  commission  for  large  distributor Sj,^another  for  small^ 


1 11  ■■ » ■»« 


distributors,  another  for  brokers,  etc.  This  plan  has  been  used  by  the  Hood 
Tire  Company  with  very  good  results. 

BONUS  ON  NET  PROFITS:  This  plan  calls  for  d ividing_^_ter^^  ^ 

classes,  (l)  city;  (2)  suburban  J  (3)  country.  Each  month  salesmen  in  the 


■■  a  Q«i  « 


* 

Strictly  city  seotions  are  credited^  with  25^  oftheir  gross  profits,  auburbaa 
salesmenwiiiLSOfoj  suburban  and  some  counitry  trad©  355^1  and  provincial  sales- 
men with  40^.  These  percentages  take  caro  of  increased  expense  of  working 
provincial  territory.  Salesmen  are  paid  a  living  salary,  withthe  privilege 
of  drawing  against  their  credit  in  case  of  emergency.  Bonus  is  paid  at  the 
end  of  year.  Urider  this  plan  salesmen  are  not  required  to  keep  expense 
accounts,  as  that  item  is  averaged  up  and  included  in  percentage  of  profits 
salesman  is  to  receive  as  bonus.  This  plan  is  used  by  E.  P.  Sanderson  &  Co.. 
of  Boston.  Gross  profits  are  figured  cm  thecost  of  the  goods  delivered  to 
the  warehouse,  regulated  by  current  market  prices--without  regard  to  actual 


cos 


t.  Tiie  salesmen  in  this  way  get  no  benefit  of  speculative  contracts  or 


gain  from  appreciation,  and  losing  nothing  through  decline  of  market  values 
All  allowances,  cash  discounts  or  deductions  of  any  kind  are  deducted  from 
the  gross  profits. 


_JXGlSfij 


based  on  hi„9  salary.  If  h^  exceeds  hi 3  task,  he  gets^aJionus.  This  plan  was 
used  effectively  by  Arbuckle  Brothers  when  they  put  Yuban  Coffee  on  the  NdW 
York  market.  The  Arbuckle  contract  provided  a  salary  of  from  $20  to  |25  a  _ 
week,  and  a  bonus  of  one  to  two  cents  a  pound  (according  to  whether  the  goods 
were  bulk  or  package)  on  monthly  delivered  sales  in  excess  of  a  given  number 
of  psaia43*  ^i   0'  lost  accjounts  were  cliiarged  back  against  salesman's  bonus. 
The  additional  earnings  of  the  salesmen  under  this  plan  ranged  from  $5  to  $75 
a  month,  and  averaged  between  $40  and  $50  a  month.  The  average  cost  per 
salesman  for  this  campaign  was  about  $32  a  week.  ^^ 

The  three  bonus  plans  detailed  in  the  following  pages  can  be  adapted  to  >> 
nearly  every  business  employing  salesmen.  ^ 


-«6" 


A  PROFIT-SHARING  PLA^f  WHICH  ENABLES   SALES?iEN 


TO  FIX  THEIR  OWN  COMPENSATION. 


/ 


The  plan  herein  outlined  has  been  developed 
and  is  now  successfully  used  by  Clawson  and 
Wilson  Company,  a  large  Buffalo  wholesale 
dry  goods  house.    The  data  Is  presented 
through  the  courtesy  of  J.  W.  Wilson,  vice- 
president  and  general  manager. 


ADVANTAGES  OF  PLAN  OVER  OLD  METHODS  ---  Sales  executives  have  generally  ccmQ  to   / 
realize  that  the  old  salary  and  ccmmisaion  methods  of  compensating  salesmen  are 
rapldlj  beccming  inadequate  for  the  ne?5ds  of  modern  business  development.  These 


m 


athcds  did  all  right  when  goods  were  bought,  but  this  condition  is  passing. 


Today  goods  are,  or  ought  to  be,  sold.  So  it  is  essential  that  sales  managers 
give  gfiririia  tViQy^t^t  to  compensation  methods  which  will  reward  salesmen  auto-    j^ 
matically  on  the  basis  of  their  value  ^:o  the  house  as  business  builders  and  not 
order  writer^.  The  distinction  is  important. 

Of  the  many  angles  that  have  been  developed  to  meet  the  new  conditions  few 
equal,  from  an  angle  of  practicability  and  simplicity,  that  worked  out  and  used 
by  Clawson  &  Wilson  Company  of  Buffalo,  N.  Y.  This  concern  has  tried  both  the 
salary  and  commission  plans.   It  found  the  salary  plan  undesirable  because  it 

.  ^^-^ 

thev  did.  Too  often  the  men  were  rewarded  on  the  basis  of  what  the  house  thought ^^L.^^^ 

-^-^   ' ,  (t^c::^ 

they  did.  Again,  a  salesman  who  su^iceeded  in  increasing  his  sales  materially  by  ^ 
dint  of  hard  work,  was  sometimes  compelled  to  wait  for  several  months  before  he 
1^8  rewarded  for  that  extra  effort,  by  an  adequate  raise  in  salary. — Hii^  the 

y 

company  felt  was  not  fair  to  the  salesmen,  who  ought  to  really  share  the  pro_fit  ^ 
on  ea.^h  salo  at  the  time  it  is  made»  and  not  be  required  to  wait. 

Some  of  these  major  objections  to  the  salary  plan  were  overcome  in  the 


commlsaion  plan,  but  this  too,  was  imsatisfaotory  because  it  encouraged  men  to  / 
push  the  articles  which  they  sold  easieist.  To  encourage  the  salesman  to  direct 
selling  energy  along  lines  that  would  be  to  the  house's  best  interests  --  and  by   U*-^ 
the  same  reasoning  to  the  salesman's  own  best  interests,  the  management  decided   ' ^^^ 
on  a  plan  of  compeuaation  that  enabled  salesmen  to  automatically  regulate  their 
own  ealaries  and  finp.nnrage^them  to  keep  expenses  down  to.^J^_very  lowest  point 

coiisi stent  with  results. 

DETERMINING  SALESMAN'S  PROFIT:   The  plan  in  a  nutshell  is  to  group  all  the ^ 

products  sold  according  to  the  margin  of  pro^ijb  they  offer  the  house.  The 
salesman  is  told  just  what  thejprofj-t  is  in  each  item.  Wnea  his  orders  come  in, 
the  accounting  department  credits  his  account  with  the  profit  on  that  sale.  At 
the  end  of  the  period  the  profit  on  all  sales  is  totaled  up.  Cancellations, 
returned  goods  on  former  orders  and  expanses  deducted,  and  the^  salasnian  is  paid 
a  predetermined  portion,  ol,this  net  profits 

What  this  portion  should  be^depflndawi.  several  factors.  One  important _ 
factor  is  the  nearness  of  the  territory  to  the  home  office\  The  company  finds 


way*  i^aiiiMMi£Mi«ii»M.i>L--|fc  »t>.i.iii  — ynwiW^WM— — ^^^  - 


it  easier  for  the  salesmen  to  sell  near  Buffalo,  than  in  the  middle  western 
states.  So  the  salesman  working  nearer  the  home  office  gets  a  smaller  portion 
of  the  profit  on  his  work  than  a  salesman  working  say,  upper  Michigan.  Other 
territories  are  those  sometimes  spoken  of  as  in  the  " nur a i^I_c p nd i t io n" .  On 
these  territories  the  company  is  willing  to  take  a  temporary  loss,  knowing  that 
eventually  a  good  business  will  be  built  up  under  strong,  constructive  salesman- 
ship. So  the  salesman  working  this  sort. oiLA-larr it ory,  quite  often  gets  a 
premium  from  the  company  sis^well  as  whatever  profit  be  i,s  able  to  make. — Aj^n 
some  salesmen  are  better  business  builders  than  others.  While  their  immediate 
sales  may  not  be  as  large,  they  take  pains  to  make  better  customers  as  they  go. 
This  is  work  which  the  company  will^^sh^  on  for  years  to  come.  The  company 


••  —  O  "  *■ 


can  well  afford  to  allow  that  WinH  nf  a  ist*  i*»c»|Tf>!^n  n,  fnr  greater  share  of  the 
profits  on  his  work,  than  a  salof^man  who  travf^M  ovBr  the  territory  skimminyj 
the  cream  from  it,  and  leavina:  «--»v,'^r  >  rr„  ^^  foV=,  r^i-e  of  itself. 
THE  PLAN  IN  OPERATIONi   As  stafp^,  the  pl«*>  svgge^ hei  here  is  not  in  any  sense 
experimental,  and  can  be  adopted  by  pny  buslno^s  where  it  is  desired  to  en- 
courage salesmen  to  pui>h  more  prnfitabJ"  i?r-c,^  m^intftin  prices  and  keep  down  ,  "^ 

expense  accounts.   This  plan  lets  the  m**-^  share  profits j.uring  a  period  of 

prosperity,  and  shoulders  them  '^^  ^>^  ^-rnp  ^.f  fh^  }n<^^   \n  n    j^eriod  of  depression. 


A  year  like.  1919,  for  ^nsten^^**,  ^«^  an  unusually  good  one  for  moat  con- 

> 

cerns.   Salesmen  wrote  a  lot  of  business  and  profits  were  high.  This  year,  in 
justice  to  the  salesman,  they  win  ^^ave  ^^  h^   ^\v^r^   «  rp^^«rd  for  good  work  last 


year 


.   Salaries  will  have  to  be  increase's,  or   1f  the  profit  has  grown  materi- 


ally in  the  case  of  a  cnmmiBsion  line,  the  salesman's  commission  8h)uld  be  in- 
creased.  Most  concerns  are  doing  thin.  Ynt   u   any^^^^--  -- -  ^n   happen  that 
this  year  should  bo  a  poor  one,  many  of  thene  concerns  w.iuld  have  to  carry 
this  added  burden  of  increased  s^^l^ng  pxpense  --  and  worpe  yet,  they  might 
have  to  carry  it  even  longer,  unless  the  rial'isinen  would  tBke  a  cut,  8^meUil.i  g 
no  business  man  likes  to  consider. 

A  still  furliifir  advantage  of  this  profit  sharing  feature  is  that  it  tendai^ 
to  attract  better  salesmen.   CJawacn  &  Wilson  have  men  who  m-^ko  as  high  as 


$10,000  a  year  under  this  plan,  who  would  have  to  be  c('nteut  with  a  $5,000  sal- 
ary w«re  they  working  for  a  concern  using  the  old  ?«ilary  plan.  But  a  man  who 
can  make  big  profits  for  himself  is  to  be  welcomed,  because  the  success  of  the 
company  depends  largely  on  what  he  gets  out  of  his  territory.  Putting  on  a 
salesman  who  can  get  twice  as  much  business  out  of  a  territoryii^meaQajore  than 
double  profits  from  that  territory  for  the  company,  because  it  costs  no  more  to 
travel  a  good  salesman  than  it  does  a  poor  one. 


--9-- 


TASK  AND  BONUS  PLA;I  OF  COMPENSAT: 
SALESMEN  ON  POINT  BASIS 


Taia  plan  was  originally  used  by  the  Beechnut 
PackiivgCajSBan^  but  haa  since  been  adopted  by  a 
number  of  concerns  in  varying  lines  of  business* 
T*t1   rarti^^'"lar].Y  suited  to  a  business  where 
salesmen  ere  to  be  rewarded  for  performing  ta s k 
not  of  a  direct  sales  nature. 


s 


ADVANTAGE  OF  POINT  METHOD  OF  COMPENSATING  SALESMEN:   A  survey  of  several  lines 
of  business  show  that  in  practically  every  field,  sales  tasks  are  unequal. 
There  are  some  products  which  are  easier  to  sell  than  others;  some  classes  of _ 
trade  that  are  more  desirable  to  the  firm;  .nme^siness  which  is  not  desirable 
at  all.  Yet  it  is  customary  to  compensate  Bal68men_o«^aj8ro33_  basis  --_elther 
a  commisBion  on  net  sales  or.  a  salary  tftsg-i  oft  ft"  ^"'^"^^  showing. 

It  ia  an  open  question  whether  such  a  basis  of  compensation  is  fair  to  the 
house  or  fair  to  the  salesman.  Why  should  a  salesman  taking  the  line  nf  leas 
resistanos.  selling  products  that  offer  a  small  margin  of  profit  or  that  are 
widely  advertised,  get  the  same  reward  as  another  salesman  who  is  selling  more 
profitable  bills  and  who  is  building  up  a  more  stable  business  within  his  terr: 
tory  for  the  house?  In  an  effort  to  correct  this  weakness  of  present  method3__e. 
compensating  salesmen  the  Baechdut  Packing  Company  recently  experimented  on  t^ 
of  its  selling  divisions  what  is  called  a  "Taek  &  Bonus  System"  for  salesmen. 

;ha  main  object  of  this  method  ia  to  develop  Ahe 


-rfiBINCIPLS  OF  THS  POINT  SYST 


salesmen  nlnnpi-fl^  p>.nf^tBhiB  linss  ta  themselves  and  to  the  Company.  For  those 
things  which  the  company  wants  done,  a  reward  is  offered  in  the  form  of  points. 
Contrawise,  a  penalty  is  fixed  for  a  salesman  who  does  the  things  the  company 

does  not  want  dafiBV''At_the_isd  of  the  year  the  number  of  poini3_are  tojtaled  U£_ 

and  a  bonus'^ihid  the  salesman  acccrdirg  to  his  record.  As  a  matter  of  fact  it 


-..10-- 

is  not  in  reality  a  bonus  as  the  money  represents  what  would  ordinarily  be  paid 
a  salesman  anyway.  The  only  difference  is  that  what  he  is  paid  he  earns-^^and  he 
earns  it  in  such  a  way  that  he  knows  he  earns  it.  Thas  the  feel-tnp;  ^Qr^ipiQ^  aynnnf 


'~"^  '■■  '■■M 


salesmen  that  they  are  not  being  paid  all  they  are  entitled  to  is  elimlpfttfld^ 


DSTERMINIKQ_THS_BASIS  OF  REWARDj)  The  irethod  used  by  the  Beechnut  Packing  Com- 
pany to  determine  what  number  of  points  to  allow  on  different  products,  and  for 
different  work  is  to  use  as  a  common  denominator  the  work  of  least  resistance. 


"  *OljK:-^K^«.i«Mawi^r«^Mn^M«^ 


raB9«*Wr^«<"l**«*«l 


"  HI  gmiFWB^— ai  iw-w" 


For  example  Beechnut  Bacon  is  the  easiest  product^o  sell.  So  a  dollar  sale  of 
Beechnut  Bacon  is  fixed  at  one  point  and  upon  that  standard  all  other  values  are 

^ ~  .  /^ 

determlned^ccording  to  the  added  difficulty  in  selling.  This  can  easily  be  de-    vT. 
termined  by  consulting  the  sales  records.  For  example  the  sales  record  might   'x  \  | 
shew  that  Beechnut  Catsup  was  three  times  as  hard  to  sell  as  the  bacon,  so  a   -^j^^ir  V 
salesman  would  be  entitled  to  a  credit  of  Jbhree  points  for  every  dollar's  worth  \ui^ 

' ~~  Ar/ 

of  catsup  sold,  *' 

The  reward  for  other  sales  factors  is  fixed  in  the  same  way,  handicapping 


the  easy  things  and  rewarding  the  difficult.  For  example,  this  company  is  very 


anxiou_s_J^  receive  reports  from  their  salesmen  as  to  the  advertising  being  used 
by  dealers.  Und^r__the^  old  method  of  coiMpenBation  the  salesmen  would  not  take 
the  time  to  send  in  these  reports  --  thsre  was  nothing  in  it  for  them.  Now  a 
salesman  gets  one  point  credit  for  each  report  sent  in  and  he  overlooks  no 
chance  to  run  up  his  points.   Similarly  ha^  geta  pointfl  for  every  call  made,_ 
which  gives  an  incentive  to  make  more  calls  per  day  --  a  good  thiog  as  every 
sales  manager  knows. 


V 

4" 


POINTS  MY  BE  CHANGED  FROSd  MONTH  TO  MONTH i   Whe_n  a  seasonable  product  is  being 
sold  it  will  be  found  advisable  to  chanije  the  points  from  month  to  month.  Seme 
products  will  sell  easier  in  winter  than  in  summer.  This  extra  reward  tends  to 


^ 


balance  up  the  output  on  products  which  would  otherwise  fluctuate  considerably. 


—11— 

In  this  connection  it  might  ba  interesting  to  kaow  how  some  of  the  concerns 
operating  on  a  fluctuating  quota  basis  adjust  their  monthly  business  with  the 
seasons.  Take  for  example  the  plan  followed  by  the  Burroughs  Adding  Machine 
Company  as  described  by  F.M.  Dodge,  of  that  company,  at  the  World's  Salesmanship 
Congress,  "Agency  quotas",  explained  Mr.  Dodge,  "are  not  divided  into  twelve 
equal  parts,  for  experience  has  proven  in  our  case  that  more  business  can  be  se- 
cured with  an  equal  amount  of  effort  in  December  than  could  be  in  January." 

"The  proportion  of  our  years  quota  assigned  to  each  month  are  as  follows^: 
January  8%,   February  7^,  March  8^,  April  8^,  M:xy  8^y  June  IC^y  July  ij,   August 
1%,   September  8l.  Octoberg^NQvember  9^,  December  12^^^"  These  figures  of 
course  apply  only  to  such  a  business  as  that  of  the  Burroughs  Company,  but  the 
significance  of  the  method  of  determining  the  sales  expected  is  that  it  is  based 
on  the  ease  of  getting  business  rather  than  en  book  shewing.  For  instance  a  lot 
of  salesmen  will  not  show  an  increase  i:i  December  over  the  other  months,  for  the 
reason  that  most  salesmen  set  a  mental  quota  of  their  own   on  what  ought  to  con- 
stituie  a  "good"  months  business,  and  when  they  have  attained  that  figure  they 
lay  down  on  the  job. 

WORKING  OUT  THE  BONUS:  In  rating  salesmen  for  bonus  the  task  is  set  at  thg^ 
minimum  salary  so  that  a  salesman  receiving  |2Q  a  week^would  require  a  mark  of 
5000  points  per  week.  With  this  for  a  basis  it  is  simple  to  figure  out  the  bonus 
to  be  paid  the  others  --  the  thirty  dollar  a  week  man  would  have  his  task  set  at 


750Q  points  a  week  and  so  on, .  He  would  have  to  make  these  points  before  he  would 
receive  a  bonu?,  and  the  bonus  would  be  paid  on  all  points  he  made  over  his  set 


tafik,   i?7-^^t  the  bonus  to  be  paid  ^iflQunts  to  is  determined  by  the  net  r 


in 


the  bu<=5ln9ss.  It  should  be  made  enough,  however,  to  look  very  tangible  to  a  ' 
S8.1esman  and  should  be  paid  to  him  annually,  rather  than  monthly  as  in  that  way 
it  becomes' a-  sort  of  bank  account  which  is  human  nature  to  desire  to  add  to.  '  / 


—  12— 

KEEPING  THE  RECORDS:  It  is  bent  to  lefjufi  thA  V^^ping  r.f  t^t?  r^^nnt^Ha  to  the 


salesman.   This  avoids  conflict  and  rImq  saves  clerk  hire.   As  a  moral  check, 
however,  it  is  well  to  have  the  records  inspected  cne  day  a  aonth  or  twelve 
times  a  year.   The  salesman  does  not  kaow  whether  cr  not  his  records  are 


checked  once  a  week  or  once  a  month,  and  as  the  inspection  will  bring  to  light 
any  dishonesty  on  the  aalesmau'a  part  it  is  safe  to  trust  them  entirely.   A 
check  of  3,000  salesmen  operating  on  this  plan  showed  that  less  than  ten  men 
were_di4ihone8t.,   In  order  to  simplify  the  work  as  much  aa  poaaible,  so  as  to 
require  but  little  of  the  saltsman's  time  some  sort  of  a  aheet  should  be  pro- 
vided which  he  can  fill  out  each  day. 

WORKING  OUT  SYSTEM  FOR  SPECIFIC  BUSIxNESS:   The  above  will  give  a  general  in- 
sigh%  into  the  possibilititrH  of  the  system  as  it  might  be  applied  to  almost 
any  business.   Just  what  work  should  be  rewarded  or  penalized,  howaver.  must  ba 
dfttftrminft.i  hy  t.hft  nftt^r'*"  Qf  '^he  buHJriH^^a  t,i  «hir^h  the  Fyetem  will  be  applied, 
A&  a  suggeatioa  a  .iipeciEnen  system  suitable  f^>r  a.  light  maft^faoiuring  bufiineaa 
is  herewith  offered.   Frcm  this  specimen  it  should  be  easy  fcr  any  concern  in 
any  line  of  business  to  work  out  an  adequate  system  of  their  own. 

NOTE  -  In  connection  with  thli  plan  we  have  been  frequently 
asked  how  salesmefj's  expenses  are  taken  into  coniiideration. 
Tne  reason  that  no  provision  has  been  made  for  saiesmeii's 
operating  costs  in  table  of  points  shown  here,  is  tnat  wg 
D0ssi^bie__ijb  is  beat  to  t  {^   »n  arbitrary  expense  ai: 
over  wnich  a  tralesman  cannot  rq,  Tnin  allowance  will  vary 
from  $2.50  to  |5'.00  a  day  (sXiriusive  of  mileage)   accord- 
ing to  size  of  town,  and  its  location. 


POINT  AND  BONUS  SYSTEJ.I  SUITABLE  FOR  A  CONCfi!RN  SELLING  A  LINE  OF  STAPLES  TO 

SMALL  DEALERS  OR  AGENTS. 


Credit  for  Selling  Desirable  Products 

Basis  of  Reward  One   Point  per  Dollar  Sale 

(a)  Easy  Selling  Advertised  Product 

(b)  Products  Offering  Double  Not  Profit 

(c)  Products  Offering  Triple  Net  Profit 

(d)  Products  Especially  Hard  to  Sell 

(a)  Praduotft  That  Have  Very  High  R^^peat  Qualitie3 
(f)  Products  That  Are  Being  Closed  Oat 

Credit  for  Securing  Particularly  D«^irab1e  B  i'^in*»S8 


(a)  New  Customer  who  discounts  bills 

(b)  New  Customer  who  pay?^  within  30  days 

(c)  NbW  Customer  who  takes  60  days  or  over 

/^Half-Credit  when  Order  if?  received  by  Mail 

Viiae  Quarter  Credit  when  order  is  closed  by  Office, 


Points 

Points 

Credit 

Dnbtt 

1 

2 

3 

2 

2 

2 

200 
150 
100 


i  «»  ^  •» 


Penalty   for  Loss   of   Customer     "Six  M.jnths  without  Baying 


L 


V 


Credit  for  Co-ODeratlr?  with  Cre-I't  D~'--.t  f.m^nt 


(ft)  Information  which  Re^^ulta  in  Saving  Account 

(b)  Local  Irvestigation  of  N^^w  Account 

(c)  Valuable  Information  Regarding  Old  Account 

Penalty  for  Bad  Debt  through  Failure  to  Report 
Penalty  for  Bad  Debt  not  Due  to  Salesman 


CredH  f^r  C'^-ODeratine  with  Advprti Bit  a;  p^tiartment 

(a)  Report  on  Dealer  Advertising  Activities 

(b)  Getting  Dealer  to  use  Store  Advertising  Matter 

(c)  Getting  Dealer  to  use  Dealer  Electrotypes 

(d)  Securing  toiling  List  from  Detaler 

C'^edit  ir^r   Co-operflti>^^  with  Sale^  Dep^rtmenJ; 

(a)  For  every  report  turned  in 

(b)  For  Calls  made  without  sales 

(c)  Information  of  interest  to  other  departments 

Penalties  and  Rewards  for  Quality  of  Sfile' mnnf^hi  p 

(a)  Misrepresenting  facts 

(b)  Complaints  from  Customers 

(c)  Gaods  Returned  "In  addition  to  credit" 

(d)  Falling  off  in  Sales  Over  .la&t  year. 


100 
60 
50 


2 

10 
10 
10 


1 

2 
1 


153 


100 
50 


1000 
600 
100 
100 


—14-- 


RATING  PLAN  WUH  BONUS  10  DOTRLOP  BAT.F.SMFN 


AND  INCR1«1ASF,  RFFIGIF-NCY 


This  plan  w-in  used  by  a  l^rgirjaMl^aaloJblli'Be 
in  an  effort  to  providB  f^n   incqntive  for  their 

salOBmen  to  bQcomo  bQi^teii,hiiaJUl§lg_P '^^ ^ "'  "^' " « 
In  this  case  the  bnnuEi  i3  paid  on  the  man^5  all- 
around  efficiency^  rather  than  on  hi 3  abili^.j 
to  secure  iinuiediate  buBiness. 


BASIS  OF  PLAN:   The  keynote  of  this  method  of  paying  r-alesmen  bonuses  over  and 
above  their  regular  coifflDission  or  sa:iary,  is  that  a  salesman  may  be  a  big  busi- 


nes3  producer,  yet  if  he  could  only  correct  certain  glaring 


-^  -.  —  r-  a 


he  would 


X 


be  a  far  more  valuable  man  to  the  bouse.  For  example,  every  sales  manager  knows 


the  salesman  who  is  indifferent  regarding  hia  correspondence,  or  who  is  careless 
in  making  out  o_rders,  or  tactless  in  handling  complaints,^-..  Under  the  straight 
salary  or  commission  plan  the  aalesman  feels  that  if  he  is  able  to  sell  a  cer- 
tain amount  of  goods,  he  is  entitled  to  certain  earnings.  He  seldom  takes  his' 
personal  shortcomings  into  consideration.  There  is  no  inducement,  save  an 
appeal  to  reason,  which  the  sales  manager  can  hold  out  to  get  him  to  correct 
these  weaknesses. 

This  system  of  paying  bonuses  provides  this  incentive,  and  places  at  the 
sales  manager *s  command  a  valuable  means  of  develcping  salesmen.  It  literally  / 
pays  the  salesman  for  making  a  better  and  more  efficient  salesman  out  of  him- 
self. It  also  serves  to  bind  him  closer  to  the  sales  manager,  inasmuch  as 
the  system  of  grading  is  left  entirely  in  the  sales  manager's  hands. 
RATING  SALESMEN  FOR  BONUS:   The  sales  manager  marks  each  Lialesman  at  the  end  of 


every  month  according  to  the  quality  of  his  work  for  that  month.  The  actual 
features  Q.t_a  man's  work  on  which  he  is  to  be  graded,  depends  entirely  upon  the 
buiiijoess.  Bat  the  following  grading^  are  used  by  a  wholesale  house  which  wants 


—15— 


to  develop  salesmen  who  will  iricreaso  t>al83  by  making  better  dealers* 

Integrity  (indicated  by  letters  of  complaint) 
Aggressiveness  (shoivn  by   new  accounts  opened,  etc,) 
Ijlduatry  ("shown  by  number  of  calls  made,  etc.) 
Economy  (indicated  by  expense  account) 
"Salesmanship  (determined  by  large  profit  sales). 

At  frequent  periods  each  salesman  is  rated  or  graded  by  the  sales  manager 

on  each  of  these  points  for  past  work.  Thus  a  salesman  may  be  graded;  Integrity 

80,  Aggressiveness  90,  Industry  60,  Eaonnruy  75.  Salesmanship  100.  Averaging  up 

tbeae  gradings,  he  would  show  a  general  efficiency  record  for  that  period  of  81. 

HOW  BONUS  ISPAID>  This  grading  would  be  published  in  a  Bales  bulletin,  and 

all  the  salesmen  would  be  listed  in  the  bulletin,  with  the  one  havios  the  hlgh- 


t  avtra^xaiiai^mJiiie  top.  The  moral  effect  of  this  publicity  is  important. 
But  more  important  to  the  Ra-lf^^man  is  the  bonus  itself. 

The  _b 0 nu 3_lj_UxfijdUb#.  tto-^managamauU fta4  &gm^Q'lJJ.Jl^^^^^°°^^®^  ^^  ^^t 

month's  business.  The  percentage  of  this  total  bonus  allowed  the  sales  force 
which  each  man  will  receive  depends  on  his  average  efficiency  grading,  A  salesman 
who  av^rage3jL00l^txb.tLXetji_set  amount,  say  $50  for  the  raonth  ^^^er^nd^ajbo^^  lus 
salary.  If  he  mishandled  a  customer,  and  the  customer  wrote  in  and  complained, 
he  would  be  marked  down  by  his  sales  manager,  and  his  average  efficiency  grading 
wuuld  be  much  lower  -  say  75%.     In  that  case,  the  of|endiDg  saie^^man  would  pay  a 
penalty  for  his  shortcomings,  and  would  have  to  be  satisfied  with  a  $35  bonus. 

This_4aan_i3_very  flexible,  and  can  be  worked  out  with  a  little  thought  to 
Rult  any  business.  It  is  well,  however,  to  koep  the rec   ■ 

the  cover  of  letter-sizod  filing  folde^r^,  so  that  all  correspondence  and  memos 

'  '    *        II      — ■ — ' 
made  from  time  to  time  can  be  kept  together  inside  the  folder  until  the  end  of 

the  month.  Thig  plan  provides  aminunitioa  to  use  in  explaining  to  a  salesman 

just  why  he  cannot  get  100^  of  l^i^_^ojl»^3  that^^month. 


nch  salesman  on 


•^»  tttlamStatite^A-JiivmM^frtv 


jST 


->r— ^^ 

m 

^s-'~ 

■i-'^ir 

—      -  ir— ■     — 

■« 

J 

■■'fl 

J^ 

VALUABLE  both  for  the  data  it  contains,  and  as  a  place 
for  systematically  keeping  information  and  statistical 
data  of  your  own.  Letter  sized.  Divided  into  twelve 
sections  by  leather  tabbed  indexes.  Each  index  tab  is  lettered 
in  gold:  "Market  Data"  "Book  and  Articles"  "Mailing  Lists" 
"Stimulating  Salesmen",  etc.  Under  each  classification  are 
filed  numerous  loose-leaf  p&iies  summarizing  sales  plans  and 
ideas,  statistical  data  and  other  vital  information  needed  in  the 
management  of  a  modern  sales  department. 


L 


Over  10,000  of  These  Desk  Books  Now  in 

Use  by  Sales  Managers 

No  well-equipped  sales  department  cm  afford  to  be  without  it.  It  will  repay  its 
cost  many  times  every  month.  It  summarizes  in  a  few  hundred  boiled  down  letters 
the  picked  sales  plans  of  America's  most  successful  sales  executives.  Invaluable  for 
working  out  sales  campaigns,  re-organizing  the  sales  force,  for  house  organs  and  sales 
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working  information. 

Some  of  the  Information  the  New  Dartnell  Desk  Book  Contains: 


Plans  for  Speeding  Sales:  Graphs  that  show 
salesmen  business  they  are  missing;  Ratz  plan  for  rout- 
ing salesmen;  plan  for  developing  all  around  efficiency; 
checking  methods  to  show  territory  conditions,  etc., 
etc. 

References  for  Sales  Executives:  List  of 
articles  that  have  appeared  in  Sales  Management 
Magazine,  Printers'  Ink,  Advertising  &  Selling,  The 
Mail  Bag,  and  other  publications  of  value  to  a  sales 
executive.  Lists  of  books  relating  to  sales  manage- 
ment and  selling.     How  to  arrange  this  data. 


Vital  Sales  Statistics  :  Statistics  for  reassigning 
quotas;  analysis  of  auto  registrations  by  states;  chart 
analysis  of  retail  sellmg  data;  charts  showing  when 
farmers  buy;  market  data  for  developing  the  small 
town  market;  automobile  expense  data;  etc. 

Model  Forms  for  Sales  Uses:  Application 
blanks  for  salesmen;  Report  forms;  Territory  ancJysis 
records;  form  of  nottfs  used  in  giving  salesmen  stock; 
salesmen's  employment  records;  salesmen's  contract 
and  dealer  agreement  forms;   etc.,  etc. 


Price,  complete  with  black  leatheirette  ring  binder,  set  of  leather  tabs, 
extra  note  sheets,  and  two   hundi-ed  pages   of    reference   data^$7.50 

Sent  on  Approval,  Subject  to  Return,   if  Not  Satisfactory 

The  Dartnell  Corporation 

Publishers  of  Books  and  Reports  for  Sales  Managers  and  Salesmen 

1805  Leland  Avenue,  Ra\enswood  Station,  CHICAGO 


Date  Du( 


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Dartnell  Corp. 

Special  repott  #17 ♦ 


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